Another French PM ousted as political deadlock under Macron continues

EU mid-market update: Another French PM ousted as political deadlock under Macron continues; BLS annual revisions pending; Sources piece triggers JPY volatility.

Notes/observations

- After French PM Bayrou failed to pass confidence vote, he is expected to officially resign today. Macron set to appoint new PM ‘in a couple days’, but political stalemate persists. Snap elections remain a risk. This will be fifth PM in <2 years, viable options are scarce due to fragmentation. French debt ratio could exceed 150% in 10 years without reforms budget consolidation threatened by rising interest costs.

- Japanese yen was volatile after reports circulated that BOJ may cut super-long JGB purchases with a rate hike possible 2025. Q4 10–25-year JGBs may drop from ¥405B/$2.75B; 25+ year unchanged at ¥150B. Taper targets zones with highest holdings (50.6% vs 40.4%). Decision hinges on Sep 17th 20-year auction, yield swings. 30-year hit 3.285%. Sources indicate target rate will remain steady at Sept 19th meeting and hike still possible by early 2026.

- Weak US dollar continues, falling to ~97.2 after weak jobs data; Fed seen resuming cuts from Sep 17th. US yields edge higher ahead of $58B 3-year auction.

- Around 10:00 a.m. ET, BLS will re-anchor the payroll survey to the QCEW (a near-census covering ~95-97% of jobs), and the Street is braced for a −0.5M to −1.0M markdown for the year through March 2025 (about −50k to −80k per month), which would recast the slowdown as an early 2024 stall and nudge odds of additional Fed cuts over the coming year. The gap reflects three plumbing issues - birth-death modeling at an inflection, lower CES response rates, and UI-coverage differences amid shifting immigration and informal work - and while prelims can move (last year’s −818k became −589k), the sectoral distribution will matter more than the headline (small-firm/services trims validate the over-impute story, broad goods-heavy cuts flag tighter finance and automation), with household-survey measures unchanged today.

- Notable Corp News: Anglo and Teck to merge into $53B copper giant; Anglo shares +8%, Glencore +3%, Antofagasta +2%.

- Second week of investor conference continues with Alphabet and Meta later today may provide first formal look in FY26 Capex spend.

- For obesity stocks: ICER’s updated draft evidence report on GLP-1s is due today and poised to revisit the 2022 verdict that these drugs weren’t cost-effective by incorporating today’s materially lower net prices and hard cardiovascular outcomes, a combination that could flip the conclusion and reset the policy debate.

- Asia closed mixed with KOSPI outperforming +1.3%. EU indices -0.7% to +0.1. US futures +0.0-0.2%. Gold +0.4%, DXY -0.1%; Commodity: Brent +0.8%, WTI +0.9%; Crypto: BTC +0.8%, ETH +0.9%.

Asia

- New Zealand Q2 Manufacturing Activity Q/Q: -3.0% v 4.8% prior; - Australia Sept Westpac Consumer Confidence: 95.4 v 98.5 prior.

- Australia Aug NAB Business Confidence: 4 v 7 prior.

- Japan LDP decides to hold 'full-spec' leadership vote (i.e. votes from up to 1M "rank and file" party members to be included in the election).

- Japan LDP Politician Taro Kono reiterated stance that if BOJ delayed rate hikes, would boost inflation.

Europe

- UK Aug BRC Sales Like-For-Like Y/Y: 2.9% v 2.0%e (**Insight: increase in overall spending driven primarily by rising prices as opposed to increasing volumes).

- France PM Bayrou lost confidence vote in Parliament; to resign from position; President Macron to appoint a new prime minister “in the next few days”, ruled out snap elections . Hoped to pass a deficit cutting Budget thru a hung parliament and stave off early legislative elections.

Americas

- Full Senate said to likely to vote on confirming Miran for Fed position on Sept. 15th (**Note: Vote would come a day before the Federal Open Market Committee meets.

Trade

- EU officials might propose 19th Russian sanctions package by Fri (Sept 12th); Could place banks in two Central Asian countries and some Russian regional banks under sanctions.

- EU said to be considering potential sanctions against China and other third countries for purchasing Russian oil and gas (**Note: US had demanded EU stops buying Russian gas if it wanted new sanctions on Putin.

- South Korea Pres Advisor noted that trade talks with US were being slightly delayed due to issue of FX from the $350B investment package.

Speakers/fixed income/fx/commodities/erratum

Equities

Indices [Stoxx600 0.00% at 550.72, FTSE +0.11% at 9,231.95, DAX -0.64% at 23,672.20, CAC-40 0.00% at 7,734.99, IBEX-35 -0.37% at 14,954.95, FTSE MIB +0.18% at 41,799.00, SMI -0.16% at 12,290.79, S&P 500 Futures +0.10%].

Market focal points/key themes: European indices opened mixed with an upward bias and remained upbeat through the early part of the session; markets seen supported as Fed prospects outweigh political concerns; among sectors leading the way higher are materials and communication services; lagging sectors include consumer discretionary and industrials; mining subsector supported following Teck and Anglo-American merger; Novartis to acquire Tourmaline Bio; ASML confirms strategic partnership with Mistral; Dutch state will further reduce its stake in ABN AMRO; earnings expected in the upcoming US session include GameStop and Oracle.

Equities

- Consumer staples: Mobico [MCG.UK] -19.0% (earnings).

- Healthcare: Novartis [NOVN.CH] -1.0% (acquires Tourmaline Bio) - Industrials: Renault [RNO.FR] +2.5% (CEO interview; hearing analyst upgrade), Saab [SAAAB.SE] -3.5% (analyst action) - Technology: ASML [ASML.NL] -0.5% (confirms Mistral AI investment), Computacenter [CCC.UK] +5.0% (earnings) - Materials: Anglo American [AAL.UK] +8.5% (to combine with Tech Resources).

Speakers

- BOJ said to not be influenced by political uncertainty and would continue to raise rates gradually; However, could affect the timing of the next hike; BOJ was no rush and had a free hand on the timing, as long as it got another rate hike done possibly by early 2026.

- BOJ said to be likely to 'slightly reduce' purchases of super-long JGBs in Oct-Dec quarter; Decision on Sept 30th. Final decision to depend on Sept 17th upcoming 20-year auction and yield volatility.

- Japan's LDP confirmed Oct 4th as leadership vote day.

- China market regulator said to urge delivery platform companies to reasonably control subsidies.

Currencies/fixed income

- USD Index approaching two month lows as it traded at 97.25 as rate divergent plays come back into focus.

- EUR/USD at 1.1750 area by mid-session. Dealers now looking to probe the upper end of the current 1.15-1.20 trading range. ECB decision on Thurs would likely see the central bank keep policy steady for a 2nd straight meeting. Markets now suspect the next cut would not occur until 2026 at the earliest.

- USD/JPY hovering around the 146.70 level as press reports keep the door open for another BOJ rate hike before the end of 2025.

- 10-year German Bund yield at 2.67% and 10-year Gilt yield at 4.63% 10-year Treasury yield: 4.07%.

Economic data

- (NL) Netherlands July Consumer Spending Y/Y: 1.3% v 0.7% prior.

- (NL) Netherlands Aug CPI M/M: 0.2% v 1.3% prior; Y/Y (final): 2.8% v 2.8%e prelim.

- (NL) Netherlands Aug CPI EU Harmonized M/M: 0.3% v 0.3% prelim ; Y/Y: 2.4% v 2.4% prelim.

- (NO) Norway Aug PPI including Oil M/M: -0.9% v +0.8% prior; Y/Y: -3.0% v -0.3% prior.

- (HU) Hungary Aug CPI M/M: 0.0% v 0.0%e; Y/Y: 4.3% v 4.3%e.

- (FR) France July Industrial Production M/M: -1.1% v -1.4%e; Y/Y: 1.3% v 0.7%e.

- (FR) France July Manufacturing Production M/M: -1.7% v -1.2%e; Y/Y: 1.5% v 2.6% prior.

- (MY) Malaysia Aug Foreign Reserves: $122.7B v $122.0B prior.

- (CZ) Czech Aug International Reserves: $165.3B v $161.9B prior.

- (TW) Taiwan Aug Trade Balance: $16.8B v $13.1Be; Exports Y/Y: 34.1% v 25.0%e; Imports Y/Y: 29.7% v 27.2%e.

Fixed income issuance

- (EU) European Union opened its book to sell 5-year and 30-year NGEU bonds via syndicate.

- (NL) Netherlands Debt Agency (DSTA) sold €1.74B vs. €1.5-2.0B indicated range in 4% Jan 2037 DSL Bonds; Avg Yield: 2.94% v 0.142% prior.

- (ES) Spain Debt Agency (Tesoro) sold total €2.52B vs. €2.0-3.0B indicated range in 3-month and 9-month bills.

- (UK) DMO sold £1.75B in 4.75% 2043 Gilts; Avg Yield: 5.291% v 5.155% prior; bid-to-cover: 3.50x v 3.38x prior; Tail: 0.2bps v 0.3bps prior.

- (AT) Austria Debt Agency (AFFA) sold €1.15B vs. €1.15B indicated in 2.95% Feb 2035 RAGB bonds; Avg Yield: 2.937% v 2.917% prior; bid-to-cover: 2.21x v 3.09x prior.

Looking ahead

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (ZA) South Africa Q2 GDP Q/Q: 0.6%e v 0.1% prior; Y/Y: 0.8%e v 0.8% prior.

- 05:15 (CH) Switzerland to sell 3-month Bills.

- 05:30 (DE) Germany to sell combined €1.5B in 2031 and 2035 Green Bunds.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (BE) Belgium Debt Agency (BDA) to sell combined €3.2N in 3-month and 12-month bil.

- 05:30 (ZA) South Africa to sell combined ZAR3.75B in 2037, 2044 and 2048 bonds.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO) (prior €7.288 with 41 bids recd).

- 05:40 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR).

- 06:00 (US) Aug NFIB Small Business Optimism: 100.5e v 100.3 prior.

- 06:00 (PT) Portugal July Trade Balance: No est v -€2.3B prior.

- 06:00 (IE) Ireland Aug Live Register Monthly Change: No est v 1.1K prior; Live Register Level: No est v 169.6K prior.

- 06:00 (FI) Finland to sell combined €2.0B in 9-month and 12-month Bills.

- 06:30 (TR) Turkey to sell bonds (2 tranches).

- 07:30 (DE) ECB’s Nagel (Germany) at BIS Summit.

- 07:50 (CH) SNB President Schlegel on BIS panel.

- 08:00 (MX) Mexico Aug CPI M/M: 0.1%e v 0.3% prior; Y/Y: 3.6%e v 3.5% prior.

- 08:00 (MX) Mexico Aug CPI Core M/M: 0.2%e v 0.3% prior; Y/Y: 4.2%e v 4.2% prior.

- 08:00 (MX) Mexico Aug Vehicle Production: No est v 309.5K prior; Vehicle Exports: No est v 289.6K prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 08:30 (UR) Ukraine Aug CPI M/M: No est v -0.2% prior; Y/Y: No est v 14.1% prior.

- 08:55 (US) Weekly Redbook LFL Sales data.

- 09:00 (BR) Brazil Aug Vehicle Sales: No est v 243.2K prior; Vehicle Exports: No est v 47.9K prior; Vehicle Production: No est v 237.8K prior.

- 09:20 (SE) Sweden Central Bank (Riksbank) Dep Gov Bunge on BIS panel.

- 11:15 (FR) ECB’s Villeroy (France) and BOE’s Breeden at BIS Summit.

- 11:30 (US) Treasury to 6-week bills.

- 13:00 (US) Treasury to sell 3-Year Notes.

- 16:30 (US) Weekly API Crude Oil Inventories:

- 17:00 (CL) Chile Central Bank (BCCh) Interest Rate Decision: Expected to leave Overnight Rate unchanged at 4.75%.

- 18:45 (NZ) New Zealand July Net Migration: No est v 1.67K prior.

- 19:00 (KR) South Korea Aug Unemployment Rate: 2.5%e v 2.5% prior.

- 21:00 (PH) Philippines July Unemployment Rate: No est v 3.7% prior.

- 21:30 (CN) China Aug CPI Y/Y: -0.2%e v 0.0% prior; PPI Y/Y: -2.9%e v -3.6% prior.

- 23:00 (ID) Indonesia Aug Consumer Confidence: No est v 118.1 prior.

- 23:35 (JP) Japan to sell 5-Year JGB Bonds.